Iden Company makes two products from a common input. Joint processing costs up to the split-off point total $64,800 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:
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Product X
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Product Y
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Total
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|
Allocated joint processing costs
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$32,400
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$32,400
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$64,800
|
|
Sales value at split-off point
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$36,000
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$36,000
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$72,000
|
|
Costs of further processing
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$20,300
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$14,300
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$34,600
|
|
Sales value after further processing
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$55,400
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$53,000
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$108,400
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Required:
a. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?
b. What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point?
c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?
d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?